Table of Contents

1.Overviews 3

2.The development prospects of hydrogen energy in Europe 5

2.1 Hydrogen production 5

2.2 Hydrogen storage and transport 8

2.3 The Application of hydrogen 11

3.Summary 16

4.References 17
 1. Overviews

Hydrogen energy is a secondary energy source with a wide range of sources, clean and carbon-free, flexible
and efficient, and rich in application scenarios. It is an ideal interconnected medium that promotes the clean
and efficient use of traditional fossil energy and supports the large-scale development of renewable energy. It
is the best choice to realize large-scale and deep decarbonization in transportation, industry, and construction.
According to the prediction of the International Hydrogen Energy Commission [1], by 2050, hydrogen energy
will create 30 million jobs, reduce 6 billion tons of carbon dioxide emissions, and create an output value of 2.5
trillion US dollars, which is expected to account for 18% of global energy.

More and more countries in the world announced their strong support for the development of hydrogen
energy. In a report released by the Hydrogen Energy Commission in February 2021, more than 30 countries
have formulated a hydrogen energy roadmap [2]. For instance, Japan became one of the first countries to
roll out a basic hydrogen strategy in 2017, and it has since set out specific plans to become a “hydrogen
society.”[3] In January 2019, South Korea announced its Hydrogen Economy Roadmap [4]. Australia’s National
Hydrogen Strategy was approved in November 2019 by the government, aiming to make the country a major
global player in the hydrogen industry by 2030 [5]. Chile launched its national strategy in November 2020,
seeking to become the world’s cheapest green hydrogen producer and a leading exporter by the 2030s [6].

Undoubtedly, the European Union is no exception. The EU announced in July 2020 that it aims to install 6 GW
of renewable hydrogen electrolysers by 2024 which will be expanded to 40GW during 2025-2030. It plans
to produce around 1 million tons of renewable hydrogen in the region over the next four years which will be
increased up to 10 million tons by 2030 [7]. Due to increasing attention to hydrogen energy and increased
support from governments of various countries, the world’s announced annual production capacity of green
hydrogen in 2030 has increased from 2.3 million tons to 6.7 million tons. In other words, in the past 2020,
participants have announced two-thirds of clean hydrogen production capacity.

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Figure 1: Announced clean hydrogen capacity through 2030

Source: Hydrogen Council [2]

Figure 2 illustrates hydrogen projects in various countries around the world. Europe leads globally in
the number of announced hydrogen projects, with Australia, Japan, Korea, China, and the USA following
as additional hubs. Of all announced projects, 55% are located in Europe. While Europe is home to 105
production projects, the announced projects cover the entire hydrogen value chain including midstream and
downstream. It has to be said that the corresponding speed of European countries to the EU's new policy
and the support for hydrogen energy is not inferior to any economy. In June 2020, Germany rolled out a
national hydrogen strategy that eyes a 200-fold increase in electrolyser capacity of up to 5 GW by 2030 [8].
A September 2020 France's hydrogen strategy provides an investment of €7.2 billion by 2030 and a hydrogen
production capacity target of 6.5 GW by 2030 [9]. Issued in October 2020, Spain’s hydrogen strategy foresees
installations of 4 GW of electrolyser capacity by 2030, with near-term goals of at least 300 MW to 600 MW by
2024 [10]. This article will then detail Europe's plans for the hydrogen energy industry chain.

Figure 2: Global hydrogen projects across the value chain

Source: Hydrogen Council [2]

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 2. The development prospects of
hydrogen energy in Europe

2.1 Hydrogen production

The total annual production of hydrogen in Europe is about 9.756 million tons, which does not include by-
product hydrogen production. The majority of hydrogen consumption is associated with two industries: oil
refineries and ammonia production. In Europe, oil refineries account for approximately 30% and ammonia
at 50%. Together with methanol production (ca. 5%) and use in metal industries (ca. 3%), these four sectors
correspond to 90% of the total hydrogen consumption in Europe [11]. However, the use of hydrogen in the
energy sector in Europe accounts for only 2%. Moreover, 96% of this hydrogen is produced with natural gas,
emitting significant amounts of CO2 in the process [12]. This form of hydrogen is not sustainable in the long
term.

EU leaders signed the Fit for 55 packages in 2020. The plan aims to reduce carbon emissions by 55% by
2030 and achieve the goal of net-zero emissions by 2050 [13]. The 55% net target is an increase on the EU’s
previous 40% level, which means the EU must implement more aggressive policies to reduce emissions.
Renewable and low-carbon hydrogen can help Europe to decarbonize the most polluting industries like steel,
chemicals, and heavy transport such as trucks or aircraft, where reducing carbon emissions is both urgent and
hard to achieve. For instance, when conditions are right, clean hydrogen could help to reduce emissions in the
steel sector by almost 95% [12].

However, Europe can currently produce 56 MW, i.e., approximately 4,700 tons of green hydrogen per year.
Germany is the leading state as far as clean hydrogen is concerned. The country provides almost half of
the European production, while no other country produces individually 10 MW [14]. Obviously, the current
proportion of European green hydrogen production is insignificant, and the road to the full realization of
green hydrogen is still far away.

Nevertheless, it is still feasible for the EU to convert gray hydrogen to green hydrogen. Switching the current
annual EU hydrogen production of 9.75 million tons to electrolysis would require 290 TWh of electricity
(about 10% of current production) [11]. The available technical potential for producing green electricity from
wind, solar and hydro is easily sufficient to cover all current electricity consumption as well as this additional
demand for green hydrogen, showing that a partial utilization of prime locations could suffice. At this point,
already 1.5-2.3 GW of new renewable hydrogen production projects are under construction or announced,
and an additional 22 GW of electrolyser projects are envisaged and would require further elaboration and
confirmation [7].

At present, the estimated cost of fossil hydrogen in the EU is about 1.5 Euro/kg, which is highly dependent

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on the price of natural gas and does not consider the cost of carbon dioxide. The estimated cost of fossil
hydrogen with carbon capture and storage is about 2 Euro/kg, and the cost of renewable hydrogen is 2.5-5.5
Euro/kg [7]. In other words, the cost of renewable hydrogen is falling rapidly. The cost of electrolysers has been
reduced by 60% in the past ten years and is expected to be halved by 2030 compared to today's economies
of scale. In areas where renewable electricity is cheap, electrolysers are expected to compete with fossil
hydrogen in 2030. These elements will become the key driving force for the gradual development of hydrogen
throughout the EU economy.

Table 1 describes the specific details of the development of hydrogen energy in the European Union and
Spain. In terms of clean hydrogen production, the EU will install at least 6 GW of renewable hydrogen
electrolysers by 2024, and 40 GW by 2030 in Europe. The installed capacity of electrolyser plants in Spain
is one-tenth that of the EU. At the end of 2020, the cumulative installed capacity of wind power and solar
energy in the EU was 354GW, and Spain's total installed capacity was 41GW, accounting for 11.62% of the total
installed capacity of the EU [16]. Moreover, this proportion has stabilized at about 11% in the past five years.
That means that Spain's green hydrogen target is moderate relative to the EU's overall target.

Table 1: Comparison of EU and Spain's hydrogen policies

Source: David [15]

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 Recently, more and more companies have invested in a large number of green hydrogen energy projects in
Spain. The largest of these is Endesa's plan to develop as many as 23 green hydrogen projects at different
stages of the renewable hydrogen fuel value chain in Spain. The related investment totals more than 2.9 billion
euros to start 340MW electrolysers and provide 2000MW of renewable energy. These projects will greatly
promote the realization of the goals of the first phase (2020-2024) of the hydrogen roadmap launched by
the Spanish government. All hydrogen production projects are considering investing in renewable power
generation parks, dedicated to powering the electrolyser. Additionally, they can also choose to put the excess
electricity directly into the grid. The following table describes some of Spain's green hydrogen energy projects.

Table 2: Green hydrogen energy projects in Spain

Source: David [15]

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2.2 Hydrogen storage and transport

Hydrogen is usually transported in both gaseous and liquid forms. In the transportation of gaseous
hydrogen, the application of container and long tube trailers has been relatively mature, but due to the small
transportation volume, it is suitable for short-distance transportation. Although pipeline transportation has
a large volume of transportation, the initial investment is high, and it is currently in the stage of small-scale
application. In liquid hydrogen transportation, tank trucks are the most mature method, but because hydrogen
needs to be liquefied and then gasified, this method has high losses and is suitable for medium and long-
distance transportation.

Table 3: Several transportation methods of hydrogen

Source：CBEA [17]

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 Since hydrogen energy will not be limited to industrial applications in the future, as the demand for hydrogen
continues to increase, the high efficiency and low cost of hydrogen energy-transportation are particularly
important. Therefore, only pipeline hydrogen transportation meets its requirements. However, there is a very
important problem that needs to be solved in the development of pipeline hydrogen transportation. Many
gas pipes are built in areas that are being electrified and do not necessarily run by areas with large renewable
energy production. In addition, it is impossible to determine that the capacity necessary for the hydrogen
demand will meet the gas capacity for which the pipes are built. This means that the potential of using
existing natural gas pipelines is unknown. Therefore, it is crucial that the government first assess the demand
for hydrogen and where it is needed. In addition, the government needs to figure out where the hydrogen
is produced and start construction of production facilities before creating the infrastructure. Otherwise, the
government may invest a lot of money in infrastructure projects that are not needed in the future [12].

According to a European hydrogen infrastructure vision [18], by 2030, the EHB (European Hydrogen
Backbone) could consist of an initial 11,600 km pipeline network, connecting emerging hydrogen valleys. The
hydrogen infrastructure can then grow to become a pan-European network, with a length of 39,700 km by
2040. Further network development can be expected after 2040.

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Figure 3: Mature European Hydrogen Backbone can be created by 2040

Source: Gas for Climate [18]

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 Furthermore, total investment costs of the envisaged 2040 European Hydrogen Backbone are expected
to range from €43 to €81 billion, covering the full capital cost of building new hydrogen pipelines and
repurposing pipelines for the European backbone. If a load factor of 5,000 hours per year is used to calculate
the Levelized transportation cost, the average cost of transporting hydrogen through the European hydrogen
backbone is estimated to be 0.11-0.21 euros per 1000 kilometer per kilogram of hydrogen. These values show
that pipeline transmission costs only represent a small portion of total hydrogen costs when considering the
full value chain from production through to end consumption. Even assuming future production costs of 1-2 €/
kg for green and blue hydrogen, transport through the hydrogen backbone will add 10% on top of production
costs for 1000 km transported.

Table 4: Estimated investment and operating cost of the European Hydrogen Backbone (2040)

Source: Gas for Climate [18]

2.3 The Application of hydrogen

Hydrogen demand in the industry sector:

If the world is to reach net-zero emissions as outlined in the IEA’s Sustainable Development Scenario,
hydrogen could account for as much as 13% of total final energy consumption. And practically all hydrogen
production by then would need to be low carbon, either through the use of fossil fuels with carbon capture,
utilization, and storage – or through the use of electrolysers. Around 3 300 gigawatts of electrolysers would
be needed [12]. At present, almost all hydrogen in the world is used in the industry sector. Therefore, the
large-scale use of clean hydrogen in the industry sector is necessary to achieve a 55% reduction in carbon
emissions by 2030.

According to the guide house’s prediction, there is already significant hydrogen demand in 2030 (293 TWh)
mostly coming from fuel/HVC (High-Value Chemicals) production. It is important to note that hydrogen
demand for HVC is located at the fuel production installation. There are already pronounced hydrogen
demand hubs, most notably in Northwest Europe and parts of Southern Italy, Spain, and France. Further,
limited hydrogen demand is scattered across Europe. By 2040, hydrogen demand in fuel/HVC production,
iron & steel, ammonia, and industrial process heat is expected to grow exponentially to 836 TWh per year. By
2050, hydrogen demand in the industry grows further and is expected to be spread across Europe and total
demand is estimated to reach 1,200 TWh per year.

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Figure 4: Expected industrial green and blue hydrogen demand 2050 based on industry
decarbonisation roadmaps of existing installations (in TWh/year)

Source: Gas for Climate [19]

Hydrogen demand in the transport sector:

At present, the application of hydrogen energy in transportation is not economical, so the government needs
to give subsidies and policy support to stimulate the development of the industry. According to the European
hydrogen energy roadmap [20], by 2030, European hydrogen fuel cell passenger vehicles will reach 3.7 million,
accounting for 1/22 of the total number of passenger vehicles, and commercial transport vehicles will reach
500,000, accounting for 1/12 of the total. Hydrogen fuel cell trucks and buses will reach 45,000, and fuel cell
trains will replace about 570 diesel trains. By 2030, the value of hydrogen energy production in Europe will
reach 130 billion euros, and by 2050, the figure will reach 820 billion.

The demand for direct hydrogen in Europe in 2030, 2040, and 2050 is forecasted to be 21 TWh, 131 TWh,
and 217 TWh, respectively for heavy road transport, approximately 3%, 25%, and 60% of the total heavy road
energy demand and 0 TWh, 9 TWh, and 68 TWh for aviation, approximately 0%, 1%, and 9% of aviation energy
demand. Hydrogen is expected to play a significant role in the future transport sector. The extent of the role
that hydrogen will play is dependent on the development of technology, infrastructure, and competitiveness
of alternative fuels. Hydrogen and hydrogen-derived synfuels are forecasted to account for 2% of the total
energy demand in the transport sector in 2030, 13% in 2040, and 25% in 2050.

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 Figure 5: Direct hydrogen demand from the transport sector per country for 2030, 2040, and 2050 (in
TWh)

Source: Gas for Climate [19]

Hydrogen demand in the power sector:

Hydrogen demand in the power sector is estimated to be 12 TWh in 2030, 301TWh in 2040, and 626 TWh
in 2050, accounting for 1%, 3%, and 7% of total EU and UK electricity demand in 2030, 2040, and 2050
respectively. Hydrogen-generated electricity is forecast to comprise up to 17% of the electricity generation per
country, with Poland, Ireland, Italy, Germany, and Belgium expected to have the highest shares of hydrogen-
generated electricity in 2050.

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Figure 6: Hydrogen generated electricity fraction of total country electricity generation in 2050 (in %)

Source: Gas for Climate [19]

Hydrogen demand in the building sector:

Overall, buildings are responsible for about 40% of the EU’s total energy consumption, and for 36% of its
greenhouse gas emissions from energy. These figures refer to the use and operation of buildings, including
indirect emissions in the power and heat sector. Therefore, whether European buildings are renovated quickly
or slowly, they must achieve net-zero emissions by 2050 at the latest. Under the Gas for Climate study’s
assumption, annual renewable and low-carbon gas demand in buildings will be around 600 TWh in 2050.
All of this could be hydrogen, yet assuming a scale-up of biomethane as in previous Gas for Climate studies,
annual hydrogen demand would be around 150 TWh.

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 Figure 7: Hydrogen and renewable and low-carbon gas demand for heating of buildings in EU and
UK (in TWh/year)

Source: Gas for Climate [19]

In general, although different agencies predict that the future hydrogen energy demand will be different, the
European hydrogen energy demand will be at least 2000 TWh before 2050. According to the Guide house
study, expected EU+UK hydrogen demand by 2050 equals 2,300 TWh, consisting of 1,200 TWh in industry, 300
TWh in heavy transport, 650 TWh in power, and 150 TWh in buildings. Figure 8 below shows how these 2050
demand figures compare with results from other recent EU decarbonisation studies.

Figure 8: Four scenarios on green and blue hydrogen demand by 2050 according to recent EU
decarbonisation studies (Unit: TWh)

Source: Gas for Climate [19]

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3. Summary

There is no doubt that Europe’s emphasis on the development of hydrogen energy has reached an
unprecedented level. Whether it is from the EU's hydrogen energy strategy roadmap, or from the national
hydrogen strategy roadmap released by various European countries. These ensure the full potential of the
green hydrogen market, provide long-term predictability for the market, and enable stakeholders on both
sides of supply and demand to make necessary investments. Cooperation and coordination between countries
are essential to ensure fair competition.

Table 5: European countries are paying more and more attention to hydrogen, and most countries
have issued national hydrogen strategies

High Medium Low

Source: PwC [21]

With the correct guidance and support, the fledgling low-carbon hydrogen market is expected to explode
and take off in 2030 and become cost-competitive within ten years. Many countries around the world have
formulated ambitious green hydrogen plans, and Europe, with its unique advantages such as abundant
renewable energy, has the opportunity to lead a low-carbon hydrogen economy. By seizing the opportunity
of the green hydrogen industry, European governments and enterprises can lay the foundation for economic
growth under the general trend of decarbonization, and establish a sustained influence in the field of low-
carbon development.

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 4. References

[1] Hydrogen Council, 2017. Hydrogen scaling up- A sustainable pathway for the global energy transition.
https://hydrogencouncil.com/wp-content/uploads/2017/11/Hydrogen-Scaling-up_Hydrogen-Council_2017.
compressed.pdf

[2] Hydrogen Council, 2021. Hydrogen Insights A perspective on hydrogen investment, market development
and cost competitiveness.
https://hydrogencouncil.com/wp-content/uploads/2021/02/Hydrogen-Insights-2021-Report.pdf

[3] METI, 2017. Basic Hydrogen Strategy.

https://www.meti.go.jp/english/press/2017/pdf/1226_003b.pdf

[4] IPHE, 2019. Roadmap towards a Hydrogen Economy: South Korea.

https://www.iphe.net/republic-of-korea

[5] COAG Energy Council, 2019. AUSTRALIA'S NATIONAL HYDROGEN STRATEGY.

https://www.industry.gov.au/sites/default/files/2019-11/australias-national-hydrogen-strategy.pdf

[6] Ministry of Energy, Government of Chile, 2020. NATIONAL GREEN HYDROGEN STRATEGY.
https://energia.gob.cl/sites/default/files/national_green_hydrogen_strategy_-_chile.pdf

[7] European Commission, 2020. A hydrogen strategy for a climate-neutral Europe.

https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52020DC0301&from=EN

[8] Federal Ministry for Economic Affairs and Energy, 2020. The National Hydrogen Strategy.
https://www.bmwi.de/Redaktion/EN/Publikationen/Energie/the-national-hydrogen-strategy.pdf ?__
blob=publicationFile&v=6

[9] FCH, 2020. Opportunities for Hydrogen Energy Technologies Considering the National Energy & Climate
Plans.
https://www.fch.europa.eu/sites/default/files/file_attach/Brochure%20FCH%20France%20%28ID%20
9473038%29.pdf

[10] MINISTRY FOR THE ECOLOGICAL TRANSITION AND THE DEMOGRAPHIC CHALLENGE, 2020. Hydrogen
Roadmap
https://ec.europa.eu/info/sites/default/files/energy_climate_change_environment/events/presentations/02.03.02_
mf34_presentation-spain-hydrogen_roadmap-cabo.pdf

[11] G. Kakoulaki, I. Kougias, N. Taylor, F. Dolici, J. Moya, 2021. Green hydrogen in Europe – A regional

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assessment: Substituting existing production with electrolysis powered by renewables.
https://www.sciencedirect.com/science/article/pii/S0196890420311766#b0110

[12] The European Files, 2021. Unlocking the Full Potential of Hydrogen in Europe.
https://www.europeanfiles.eu/wp-content/uploads/2021/02/Unlocking-The-Full-Potential-Of-Hydrogen-In-
Europe-Issue-65.pdf

[13] WWF, 2021.‘Fit for 55%’: what is it and what does WWF want?
https://www.wwf.eu/?2302316/Fit-for-55-what-is-it-and-what-does-WWF-want

[14] Energy Industry Review, 2021. Renewable Hydrogen: Driver of Green Revolution in Europe?
https://energyindustryreview.com/renewables/renewable-hydrogen-driver-of-green-revolution-in-europe/

[15] David, D. 2021. THE SPANISH HYDROGEN STRATEGY.

https://www.wfw.com/articles/the-spanish-hydrogen-strategy/

[16] IRENA, 2021. Renewable Energy Capacity Statistics 2021.

[17] CBEA, 2019. 氢气运输：不同运输方式的成本测算 .

http://m.cbea.com/yldc/201908/767538.html

[18] Gas for Climate, 2021. Extending the European Hydrogen Backbone-A EUROPEAN HYDROGEN
INFRASTRUCTURE VISION COVERING 21 COUNTRIES.
https://gasforclimate2050.eu/wp-content/uploads/2021/06/European-Hydrogen-Backbone_April-2021_V3.pdf

[19] Gas for Climate, 2021. Analyzing future demand, supply, and transport of hydrogen.
https://gasforclimate2050.eu/wp-content/uploads/2021/06/EHB_Analysing-the-future-demand-supply-and-
transport-of-hydrogen_June-2021_v3.pdf

[20] FCH JU, 2019. Hydrogen Roadmap Europe.

https://www.fch.europa.eu/sites/default/files/Hydrogen%20Roadmap%20Europe_Report.pdf

[21] PwC, 2021. Prospect analysis and insight of hydrogen energy industry.
https://www.strategyand.pwc.com/cn/zh/reports/2021/prospect-analysis-and-insight-of-hydrogen-energy-
industry-may2021.pdf

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